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Gold futures reached their highest level since Sept. 21 on Thursday, as traders raised their bets that a Joe Biden win in the tightly-closed US presidential election would lead to larger fiscal stimulus packages. At least that’s what analysts told Reuters.
I tend to think that gold futures were higher because the US dollar tumbled against a basket of major currencies as investors lifted safe-haven hedges on the dollar. Before Tuesday’s election, investors were buying US dollars and selling gold as a precaution against a contested election. Now that Joe Biden appears to be the clear winner, President Trump will have a hard time tying up the results in court so there is no need to hold onto the dollar as a hedge.
At 21:36 GMT, December Comex Gold Futures are trading at $ 1,949.50, up $ 53.30 or + 2.81%.
The problem of thinking that gold is rising due to the greater chances of bigger stimulus packages is flawed because Congress remains divided and it will be difficult for President Biden to pass major stimulus bills. Let’s say there will probably be a stimulus, but it will be much less than anticipated before the elections. The Democrats needed to sweep the elections to gain control of everything and they did not.
Daily swing chart technical analysis
The main trend is bullish according to the daily swing chart. The trend appeared Thursday when buyers pulled the flip top to $ 1936.00 and reaffirmed when they pulled $ 1939.40. The new oscillating fund is $ 1859.20. A trade through this fund will turn the main trend down.
The minor trend is also up. A trade through $ 1881.80 will change the minor downtrend. This will change the momentum to the downside.
The main range is $ 2,089.20 to $ 1,851.00. Its retracement zone at $ 1970.10 to $ 1998.20 is the main bullish target. Look for profit taking in the first test of this area.
On the downside, the first support is a 50% level at $ 1917.40, followed by $ 1889.70.
Short term outlook
Our work suggests that if the bullish momentum remains intact, the main 50% level at $ 1970.10 will become the next bullish target. This will be followed by a main top of $ 1983.80 and a resistance group of $ 1998.20 to $ 2001.20.
The first minor support is the pair of old highs at $ 1939.40 and $ 1936.00. This is followed by the short-term 50% level at $ 1917.40.
